Fulgent Genetics, Inc. (NASDAQ: FLGT)

Fulgent Genetics, Inc., often recognized by its ticker symbol FLGT, is a technology-based company that operates in the healthcare sector, specifically within the laboratory services and therapeutic development industries. The company's mission is to enhance patient care and quality of life through the provision of flexible and affordable diagnostic and genetic tests and testing services.

Fulgent Genetics' primary business activities revolve around two main areas. Firstly, its laboratory services business offers a wide-ranging anatomic pathology test menu, encompassing gastrointestinal pathology, dermatopathology, urologic pathology, breast pathology, neuropathology, and hematopathology. These tests are backed by the company's extensive geographic presence, housing multiple Clinical Laboratory Improvement Amendments of 1988 (CLIA)-licensed laboratories across the United States. Secondly, the therapeutic development business focuses on creating drug candidates for a broad spectrum of cancers, utilizing a novel nanoencapsulation and targeted therapy platform.

The company's revenue generation primarily stems from its laboratory services business. This includes next-generation sequencing (NGS) tests for biopharma research and clinical tests for rare diseases, hereditary cancer, reproductive health, and various other disease subtypes. The primary products and services offered by Fulgent Genetics encompass gastrointestinal pathology, dermatopathology, urologic pathology, breast pathology, neuropathology, and hematopathology tests, all supported by the company's extensive network of CLIA-licensed laboratories.

In the competitive landscape of pathology, genetic, and diagnostic testing services, Fulgent Genetics competes against established entities such as Ambry Genetics Corporation, Baylor Genetics, Caris Life Sciences, Exact Sciences Corporation, Foundation Medicine, GeneDx Holdings Corp, Guardant Health, Invitae Corporation, Laboratory Corporation of America Holdings, Myriad Genetics, Natera, NeoGenomics Laboratories, PerkinElmer, Quest Diagnostics, and Tempus AI. Despite these competitors' larger customer bases, expansive brand recognition, and greater financial, technological, and research and development resources, Fulgent Genetics has managed to carve out a niche for itself.

Fulgent Genetics' customers fall into three categories: insurance companies, institutional clients, and patients who pay directly. The company's sales and marketing efforts are spearheaded by internal teams of sales and marketing professionals, as well as a network of field-based sales representatives knowledgeable about the company's tests. Historically, Fulgent Genetics has relied on organic growth and word-of-mouth among its customers to generate interest in its tests, demonstrating the perceived value of its offerings.

The company's intellectual property portfolio is crucial to its overall strategy and capturing the value of its research output. Fulgent Genetics leverages a combination of registered and unregistered intellectual property rights, including trade secrets, licenses, patents, trademarks, and customary contractual protections, to safeguard its core technology and intellectual property. As of December 31, 2023, the company owns or exclusively licenses over 30 issued or allowed patents and over 10 active patent applications, primarily centered on its nano-drug delivery platform technology for the delivery of water-insoluble or poorly soluble drugs for treatments of disease conditions, including cancer.

Fulgent Genetics is subject to regulations by federal and state authorities, such as the Centers for Medicare & Medicaid Services (CMS) and the College of American Pathologists (CAP). The company's clinical laboratories must hold specific federal licenses, certifications, and permits to conduct business, with Fulgent Genetics' laboratories being CLIA-certified and accredited by the CAP, a CMS-approved accrediting organization. In addition, the laboratories maintain certain state laboratory licenses, and Fulgent Genetics maintains good standing with all state authorities.

In terms of advertising laboratory services or LDTs, Fulgent Genetics' advertising is governed by federal truth-in-advertising laws enforced by the Federal Trade Commission (FTC) and comparable state consumer protection laws. The company is also subject to regulations regarding payor reimbursement for its tests and testing services, using Current Procedural Terminology (CPT) codes to bill third-party payors. Furthermore, Fulgent Genetics is subject to the Protecting Access to Medicare Act of 2014 (PAMA), which requires laboratories to report private payor payment rates and volumes for clinical diagnostic laboratory tests (CDLTs) to the Centers for Medicare & Medicaid Services (CMS) every three years.